Refinance Calculator
New payment, monthly savings and break-even point on a refinance.
New monthly payment
$1,589.81
saves $306.19/mo
Monthly savings
$306.19
Break-even
14 months
AI Breakdown & Smart Takeaway
Plain-English insight on your numbers
Get a personalized explanation of what these results mean — and how to improve them.
How the Refinance Calculator works
The Refinance Calculator helps homeowners instantly compare their current mortgage against a potential new loan, revealing the new monthly payment, total monthly savings, and the break-even point at which those savings offset the closing costs of refinancing. It's built for anyone weighing whether a lower interest rate or shorter loan term is worth the upfront cost of replacing their existing mortgage.
At its core, this calculator takes four pieces of information about your current mortgage — remaining balance, interest rate, remaining term, and current monthly payment — and compares them against the proposed terms of a new loan: new interest rate, new loan term, and estimated closing costs. Using the standard amortization formula, it computes your new monthly principal-and-interest payment and subtracts it from your current payment to determine your monthly savings. That single number drives everything else in the analysis.
The break-even point is the most critical output and the one most homeowners overlook. It is calculated by dividing total closing costs by the monthly savings: if refinancing costs $6,000 and saves you $200 per month, your break-even is 30 months. If you sell or refinance again before reaching that threshold, you will have lost money on the transaction. The calculator surfaces this timeline so you can match it against how long you realistically plan to stay in the home — a comparison that determines whether refinancing is actually worth pursuing.
Closing costs are the most commonly underestimated factor in any refinance decision. In the United States, these typically run between 2% and 5% of the loan amount and include origination fees, appraisal fees, title insurance, and prepaid items like property taxes and homeowner's insurance escrow. Some lenders offer 'no-closing-cost' refinances that roll these fees into the loan balance or offset them with a higher interest rate — both of which shift the break-even math significantly. Always input realistic closing cost estimates rather than leaving the field at zero, or your savings projection will be overstated.
A common strategic mistake is focusing solely on the interest rate difference while ignoring the loan term reset. Refinancing a mortgage that has 22 years remaining into a new 30-year loan at a lower rate often produces an attractive monthly payment reduction but dramatically increases the total interest paid over the life of the loan. For a complete picture, compare not just monthly savings but also total interest cost under both scenarios. The most financially optimal refinance often involves a shorter new term — such as going from a 30-year to a 15-year mortgage — which may reduce or eliminate monthly savings but can save tens of thousands of dollars in lifetime interest.
Formula
Break-even months = Closing costs / Monthly savings
Pro tips
- Match your break-even timeline to your plans: if you expect to move or sell within three to five years, a refinance with a 48-month break-even is likely a losing financial move regardless of how attractive the new rate looks.
- When entering closing costs, use the Loan Estimate document your lender is legally required to provide within three business days of application — it gives you itemized figures far more accurate than rule-of-thumb percentages.
- Consider refinancing into a shorter term rather than chasing the lowest monthly payment. Moving from a 30-year to a 20- or 15-year loan at a lower rate often saves more in total interest than a rate reduction alone, even if monthly savings are modest.
- Run the calculator with a realistic closing cost range (low estimate and high estimate) to see how sensitive your break-even point is to fee variation — a $2,000 difference in costs can shift the break-even by several months.
- If your credit score has improved significantly since your original mortgage, or if you've paid down enough equity to cross the 80% LTV threshold and eliminate PMI, those are strong secondary reasons to refinance that amplify the savings this calculator shows.
Key terms
- Break-Even Point
- — The number of months it takes for cumulative monthly savings from a refinance to fully recover the upfront closing costs paid to obtain the new loan.
- Closing Costs
- — Upfront fees and expenses paid to complete a mortgage refinance, typically ranging from 2%–5% of the loan amount in the US, including lender fees, appraisal, and title charges.
- Amortization
- — The process of paying off a loan through scheduled, equal monthly payments that gradually shift from being mostly interest to mostly principal over the loan term.
- Remaining Principal Balance
- — The outstanding loan amount still owed on your current mortgage, which becomes the basis for calculating the new refinanced loan.
- Monthly Savings
- — The difference between your current monthly mortgage payment and the new payment after refinancing, before accounting for any closing costs.
- No-Closing-Cost Refinance
- — A refinancing option where the lender covers upfront fees in exchange for either a higher interest rate or by rolling the costs into the new loan balance, extending the break-even timeline.
